Saint Vincent P.I.L.O.T. deal nears vote

One of the region's largest nonprofits is ready to renew its deal to provide a steady source of revenue to the city of Erie, Erie School District and Erie County.

Saint Vincent Hospital's extension of the agreement, called a P.I.L.O.T., for payments in lieu of taxes, comes as the three taxing authorities are looking to get more money from nonprofits.

The taxing authorities still must approve Saint Vincent's five-year deal, which would be effective Jan. 1. It would require the hospital make annual payments of about $727,000 a year — $362,000 to the school district, $253,000 to the city and $112,000 to the county, according to the proposal.

The amounts would be equal to 50 percent of what Saint Vincent would pay if the 20 properties covered in the deal, including the main hospital building, were fully taxable. Saint Vincent is part of the Pittsburgh-based Allegheny Health Network. The P.I.L.O.T. would cover only properties in Erie.

"Saint Vincent has a long and proud history of supporting the community though our charitable mission and contributions made through our existing P.I.L.O.T. agreement," Dan Laurent, spokesman for Allegheny Health Network, said in a statement. "We have been engaged in discussions with the Erie City school district as well as the city and county on a new P.I.L.O.T. agreement and look forward to sharing the results of those deliberations when appropriate."

City Council, the Erie School Board and County Council soon will vote on the proposal, though approval appears likely. The deal is similar to P.I.L.O.T. agreements that the taxing authorities have with other large nonprofits, including UPMC Hamot, which renewed its P.I.L.O.T. deal in the spring of 2016.

The proposal came up briefly at the School Board's nonvoting study session on Wednesday and the board will vote on the deal at its next regular meeting, on Jan. 18. Board President Frank Petrungar Jr. said no one on the board has raised opposition to the proposal.

City Council and County Council would vote on the deal once the School Board decides. City Solicitor Greg Karle said he has been reviewing the proposal.

"So far I have identified no problems with it," Karle said.

Saint Vincent, Hamot and other nonprofits in Erie County have been in P.I.L.O.T. deals since the 1990s, when court fights threatened the organizations' tax exemptions. Saint Vincent, Hamot and the other nonprofits have retained their exemptions in exchange for the payments in lieu of taxes.

The deals have been particularly valuable to the taxing authorities in the city, where about 30 percent of the assessed value of all property is exempt from property taxes.

Saint Vincent's four-year P.I.L.O.T. agreement expired Dec. 31. It has been in negotiations with the taxing authorities and the Erie County Board of Tax Assessment Appeals to make some changes to a renewed deal.

They include making the agreement last for five years rather than four, to bring the deal more in line with the terms of Hamot 's five-year arrangement. The new deal, like Hamot's, also features an "evergreen clause" that requires automatic renewal after five years unless Saint Vincent or a taxing authority objects, said Dan Susi, the solicitor for the Assessment Board.

"I never got a sense that anyone was not going to do it," Susi said of renewing Saint Vincent's agreement.

The Erie School District's chief financial officer, Brian Polito, said the district welcomed the deal as the school system struggles to remain solvent.

"We were able to negotiate this and get both hospitals on the same terms and the same time frames," Polito said.

The Saint Vincent deal is based on a total assessed value of about $43.5 million for the 20 properties, including the 642,484-square-foot main hospital building near West 25th and Myrtle streets, assessed at $34.5 million, according to county assessment records. Half the total assessed value of the properties is $21.75 million.

The total assessed value of the properties in Saint Vincent's previous deal, which expired Dec. 31, was about $37 million. The new deal includes newer properties, such as a parking ramp at 310 W. 24th St., assessed at $6.4 million.

Hamot pays more under its P.I.L.O.T. agreement because it has more affected properties. The current total assessed value of the 59 properties subject to Hamot P.I.L.O.T. is $85 million, with most of that amount — about $62 million — attached to Hamot’s 584,000-square-foot main building at 4 E. Second St.

Based on half the overall assessed value, or $42.5 million, Hamot’s payments in lieu of taxes are about $1.4 million a year. The Erie School District receives about $706,000; the city, about $495,000; and the county, about $219,000. Hamot, like Saint Vincent, also pays taxes on properties that are taxable.

Hamot wants the assessed value in its deal reduced, which would drop the size of its payments in lieu of taxes. That dispute, which led Hamot to sue in Erie County Court in 2012, remains unresolved, said Scott Maas, director of the Erie County Assessment Bureau.

Under Hamot's deal and the proposed deal for Saint Vincent, the taxing authorities and the hospitals can seek to reduce or increase the amount of the assessed value — and thus the size of the payments — during the course of the deals. Construction or demolition of property can trigger the requests.

Ed Palattella can be reached at 870-1813 or by email. Follow him on Twitter at twitter.com/ETNpalattella.